Provisions of income

Tax Act
The Income Tax Act, 1961, is the primary statute governing the taxation of incomes in India. It lays down the
rules and regulations for the levy, administration, collection, and recovery of income tax. Here are some key
provisions of the Act:

### 1. **Charge of Income Tax (Section 4)**

- **Scope**: This section outlines the charge of income tax and provides that income tax shall be charged at
the rates prescribed in the Finance Act for that assessment year.

### 2. Residential Status and Scope of Total Income (Section 6)

- Determination of Residential Status: An individual's residential status determines the scope of their taxable
income. The Act defines different residential statuses: Resident and Ordinarily Resident (ROR), Resident but Not
Ordinarily Resident (RNOR), and Non-Resident (NR).

### 3. Heads of Income (Sections 14 to 59)

- Categories: The Act classifies income under five heads:
- Salaries (Sections 15 to 17)
- Income from House Property (Sections 22 to 27)
- Profits and Gains of Business or Profession (Sections 28 to 44)
- Capital Gains (Sections 45 to 55)
- Income from Other Sources (Sections 56 to 59)

### 4. Salaries (Sections 15 to 17)

- Definition and Components: This includes basic salary, allowances, perquisites, and retirement benefits.

### 5. Income from House Property (Sections 22 to 27)

- Calculation: The taxable income is determined by computing the annual value of the property, deducting
municipal taxes paid, and allowing for standard deductions.

### 6. Profits and Gains of Business or Profession (Sections 28 to 44)

- Computation: This head covers income earned from trade, commerce, manufacturing, and professional
services. Specific provisions for allowable expenses and depreciation are included.

### 7. Capital Gains (Sections 45 to 55)

- Types: Capital gains are categorized as long-term or short-term, depending on the holding period of the asset.
- Computation: The taxable gain is calculated by deducting the cost of acquisition, cost of improvement, and
transfer expenses from the sale proceeds.

### 8. Income from Other Sources (Sections 56 to 59)

- Residual Head: This includes income that doesn't fall under the other heads, such as interest, dividends,
winnings from lotteries, etc.
*
*### 9. Deductions (Sections 80C to 80U)
- Chapter VI-A: Various deductions are available to taxpayers, such as:
- Section 80C: Investments in specified savings instruments.
-

- Section 80D: Premiums paid for health insurance.

- Section 80G: Donations to certain funds and charitable institutions.
-

- Section 80E: Interest on education loans.

-

### 10. Assessment Procedures (Sections 139 to 158)

- Filing of Returns: Section 139 specifies the due dates and forms for filing income tax returns.
- Self-Assessment: Section 140A allows taxpayers to self-assess and pay their due taxes.
- Scrutiny Assessments: Section 143 covers the detailed scrutiny of returns filed.
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### 11. Advance Tax (Sections 207 to 219)
- Prepayment of Tax: Taxpayers are required to pay taxes in advance in installments if their tax liability exceeds
Rs. 10,000 in a financial year.

### 12. Tax Deducted at Source (TDS) (Sections 190 to 203) -

- TDS Provisions: These sections mandate the deduction of tax at source on various payments like salaries,
interest, dividends, and contractual payments.

### 13. Penalties and Prosecutions (Sections 270 to 275)

- Penal Provisions: These sections lay down the penalties for non-compliance, concealment of income, and
failure to file returns. -
### 14. Income Tax Authorities (Sections 116 to 138) -
- Administrative Structure: Defines the hierarchy and powers of income tax authorities responsible for
enforcing the Act.
-

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### 15. Appeals and Revisions (Sections 246 to 264) ~ 256226
- Redressal Mechanism: Provides a framework for taxpayers to-
appeal against assessment orders and seek
revisions.

### 16. Clubbing of Income (Section 60 to 64)

- **Income
Attribution**: Income of one person may be included in the income of another under certain
conditions to prevent tax evasion.
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### 17. **Set-off and Carry Forward of Losses (Sections 70 to 80)**
- **Loss Adjustment**: Provisions for setting off current year's losses against current year's income
and carrying forward unabsorbed losses to subsequent years.

### 18. Double Taxation Relief (Sections 90 and 91)

- Avoidance of Double Taxation: Methods to relieve taxpayers from being taxed twice on the same
income by different jurisdictions.

### 19. Transfer Pricing (Sections 92 to 92F)

- International Transactions: Regulations to ensure that international transactions are conducted at
arm's length prices.

### 20. General Anti-Avoidance Rule (GAAR) (Sections 95 to 102)

- Anti-Avoidance Provisions: To prevent aggressive tax planning and avoidance schemes.

### 21. Miscellaneous Provisions

- Definitions (Section 2): Definitions of various terms used in the Act.
- Liability in Special Cases (Sections 159 to 179): Provisions relating to the liability of representatives,
executors, and companies under liquidation.

These provisions collectively ensure the comprehensive taxation of income, promote compliance, and
prevent tax evasion, thereby contributing to the fiscal policy objectives of the government.
1. Which section of the Income Tax Act, 1961, outlines the charge of income tax?
- a) Section 2
- b) Section 4
- c) Section 6
- d) Section 10

2. How is the residential status of an individual determined under the Income Tax Act,
1961?
- a) Based on their nationality
- b) Based on their place of birth
- c) Based on their period of stay in India
- d) Based on their income level

3. Under which head is income from salary taxed?

- a) Income from House Property
- b) Profits and Gains of Business or Profession
- c) Salaries
- d) Income from Other Sources

4. Which section deals with income from house property?

- a) Sections 15 to 17
- b) Sections 22 to 27
- c) Sections 28 to 44
- d) Sections 45 to 55

5. What is included under 'Income from Other Sources'?

- a) Salary
- b) Business profits
- c) Dividends and interest
- d) Capital gains

6. Which section allows deductions for investments in specified savings instruments?

- a) Section 80C
- b) Section 80D
- c) Section 80G
- d) Section 80E

7. What is the due date for filing income tax returns for individuals (not having audit
requirement)?
- a) 31st March
- b) 31st July
- c) 30th September
- d) 31st December

8. What is the purpose of advance tax?

- a) To encourage savings
- b) To spread tax payments over the year
- c) To avoid tax evasion
- d) To simplify tax computation

9. Which sections mandate the deduction of tax at source (TDS)?

- a) Sections 80C to 80U
- b) Sections 207 to 219
- c) Sections 190 to 203
- d) Sections 246 to 264

10. Under which sections are penalties for non-compliance and concealment of income
covered?
- a) Sections 116 to 138
- b) Sections 246 to 264
- c) Sections 270 to 275
- d) Sections 90 and 91

11. Which section deals with the appeal process for assessment orders?
- a) Sections 207 to 219
- b) Sections 246 to 264
- c) Sections 190 to 203
- d) Sections 139 to 158

12. What is the main objective of clubbing provisions under Sections 60 to 64?
- a) To promote tax planning
- b) To prevent tax evasion through asset transfers
- c) To encourage family income pooling
- d) To simplify tax filing
13. What do Sections 70 to 80 deal with in the Income Tax Act?
- a) Tax deductions
- b) Advance tax
- c) Set-off and carry forward of losses
- d) Tax appeals

14. Which sections cover the provisions for double taxation relief?
- a) Sections 246 to 264
- b) Sections 70 to 80
- c) Sections 90 and 91
- d) Sections 116 to 138

15. Transfer pricing provisions are detailed under which sections?

- a) Sections 64 to 64A
- b) Sections 92 to 92F
- c) Sections 70 to 80
- d) Sections 116 to 138

16. Under which sections is the General Anti-Avoidance Rule (GAAR) covered?
- a) Sections 64 to 64A
- b) Sections 92 to 92F
- c) Sections 95 to 102
- d) Sections 116 to 138

17. Which section defines various terms used in the Income Tax Act?
- a) Section 2
- b) Section 4
- c) Section 6
- d) Section 10

18. Who is taxed under the provisions of 'Liability in Special Cases'?

- a) Individual taxpayers
- b) Corporate entities
- c) Representatives, executors, and companies under liquidation
- d) Non-resident Indians

19. Which section deals with the taxation of revocable transfers?

- a) Section 61
- b) Section 64
- c) Section 92
- d) Section 95

20. What is the purpose of the Income Tax Authorities as defined in Sections 116 to 138?
- a) To facilitate tax collection
- b) To ensure compliance with tax laws
- c) To provide tax planning advice
- d) To administer the provisions of the Income Tax Act

### Answers

1. b
2. c
3. c
4. b
5. c
6. a
7. b
8. b
9. c
10. c
11. b
12. b
13. c
14. c
15. b
16. c
17. a
18. c
19. a
20. d